comments welcome three decades of financial sector risk joel f houston and kevin j stiroh march 2006 abstract this paper examines the evolution in us using firm level equity market data from 1975 to 2005 over past volatility has steadily increased reached extraordinary levels 1998 2002 much recent turbulence can be attributed a series major shocks we find evidence an upward trend only for common component that affects entire while idiosyncratic remains dominant combination deregulation diversification reduced its relative importance since early 1990s within commercial banks show largest rise which also reflects industry not despite these changes links between economic activity have declined years results implications investors bank regulators other policymakers who are concerned with origins about markets real america professor warrington college business university
